Technology, media and telecoms companies have overtaken financial services as
the biggest acquirer of office space in the West End for the first time
since the dotcom crash.

In the latest example of the boom in the sector, research by property agent King Sturge has found that TMT companies accounted for 23pc of rental agreements on West End offices in 2010, against 14pc for the financial sector.

The demand is being driven by technology and web-based companies, whose access to millions of users is attracting significant investment in the sector. Facebook was recently valued at $50bn (£31bn) after Goldman Sachs invested in the company, but critics have warned of a potential repeat of the dotcom bubble, with many companies still struggling to make a profit.

It is the first time since 2000 that TMT occupiers have overtaken financial services, which includes banks, private equity and hedge funds. The sector is poised to repeat the feat this year. According to King Sturge, 20 companies are currently scouring the West End for 798,000 sq ft of office space, compared to 422,000 sq ft of space for financial services. Google, Twitter and Facebook are all understood to be looking to rent offices in Central London.

Catherine Jones, head of West End office research at King Sturge, said: “TMT is one of the few business sectors to have seen genuine expansion, and demand is such that occupiers are looking beyond the traditional boundaries of Soho into the wider West End market. This is also being driven by the availability of large, newly developed grade A space offering more attractive rental terms than the prime rents seen in the core of the West End. Furthermore, many of these new buildings, with large floor plates, are often efficient ‘cost in use’ for their occupants.”

The research predicts that the soaring demand from the sector, which meant 3.3m sq ft of space was leased in the West End last year, will drive rental values up sharply.